Aristocrat wrote:
In the United States, landowners are effectively insured against natural disasters because the government subsidizes all land repairs by providing emergency relief after natural disasters. This “subsidy” is a partial cause for the high percentage of houses built on disaster-prone lands because it gives owners no financial incentive to research whether the land on which they build their houses is secure against disaster, argues an actuary. If owners were more selective, then potential house sites would need to be safe before being developed.
The actuary's argument makes which of the following assumptions?
A) Natural disasters are most costly when they strike large houses built close together.
B) A large percentage of landowners own several different lands across states.
C) The most careful site selection tends to be by owners building the more expensive houses.
D) The difference in the relief amounts paid to owners by different states has no major effect on site selection.
E) Potential builders can know which lands are secure against disaster.
Landowners insured against natural disasters => high % of houses are built on disaster prone areas as there is no incentive to do otherwise.
If owners were more selective, the area would need to be safe before the builders could build on them.
Gap - It's easy to know if a particular piece of land is safe.
A - Out. The arguments mentions nothing about the size of houses, or their arrangement.
B - Out. Irrelevant.
C - Out. The Argument says owners should be more selective, but it doesn't mean anything about them being careful, or if the size of a house makes a difference.
D - Out. This statement goes a little too beyond the scope of this argument. We need to make an assumption by considering the relief amount paid by govts. of different states for different areas, to even consider this as an unstated assumption for the argument.
E - Keep. Builders can know which lands are safe.
Why E?
If I negate E i.e. there is no way to know which piece of land is safe from natural disasters, then this entire argument FALLS apart. If I cannot know which piece of land is safe, no amount of financial incentive from the govt. or selection from a land owner will help in building houses in areas 'considered' safe.
That's why E is the answer.